Question 1

Income statements prepared internally for management often show cost of goods sold at standard cost and variances are

Accepted Answer

A)  separately disclosed.
B)  deducted as other expenses and revenues.
C)  added to cost of goods sold.
D)  closed directly to retained earnings.E) None of the above
F) A) and B)

Question 2

The labour time requirements for standards may be determined by the

Accepted Answer

A)  sales manager.
B)  product manager.
C)  industrial engineers.
D)  payroll department manager.E) All of the above
F) A) and B)

Question 3

If the standard hours allowed are less than the standard hours at normal capacity, the volume variance

Accepted Answer

A)  cannot be calculated.
B)  will be favourable.
C)  will be unfavourable.
D)  will be greater than the spending variance.E) None of the above
F) A) and C)

Question 4

If a company is concerned with the potential negative effects of establishing standards, they should

Accepted Answer

A)  set loose standards that are easy to fulfill.
B)  offer wage incentives to those meeting standards.
C)  not employ any standards.
D)  set tight standards in order to motivate people.E) C) and D)
F) A) and B)

Question 5

If standard costs are incorporated into the accounting system,

Accepted Answer

A)  it may simplify the costing of inventories and reduce clerical costs.
B)  it can eliminate the need for the budgeting process.
C)  the accounting system will produce information which is less relevant than the historical cost accounting system.
D)  approval of the stockholders is required.E) A) and C)
F) B) and C)

Question 6

A materials quantity variance is calculated as the difference between the standard direct materials price and the actual direct materials price multiplied by the actual quantity of direct materials used.

Accepted Answer

A) True 
 B)False

Question 7

An unfavourable labour quantity variance may be caused by

Accepted Answer

A)  paying workers higher wages than expected.
B)  paying workers a bonus at year-end.
C)  worker fatigue or carelessness.
D)  higher pay rates mandated by union contracts.E) None of the above
F) All of the above

Question 8

It is possible that a company's financial statements may report inventories at

Accepted Answer

A)  budgeted costs.
B)  standard costs.
C)  both budgeted and standard costs.
D)  none of these.E) A) and B)
F) B) and C)

Question 9

Which of the following could cause a debit balance in the direct material price variance accounts?

Accepted Answer

A)  Paying more than the standard price per unit for direct material
B)  Paying less than the standard price per unit for direct material
C)  Using more than the standard quantity of direct material
D)  Using less than the standard quantity of direct materialE) A) and B)
F) C) and D)

Question 10

The total materials variance is equal to the

Accepted Answer

A)  materials price variance.
B)  difference between the materials price variance and materials quantity variance.
C)  product of the materials price variance and the materials quantity variance.
D)  sum of the materials price variance and the materials quantity variance.E) C) and D)
F) A) and D)

Question 11

Standard costs may be used by

Accepted Answer

A)  universities.
B)  governmental agencies.
C)  charitable organizations.
D)  all of these.E) B) and C)
F) None of the above

Question 12

The total standard cost to produce one unit of product is shown

Accepted Answer

A)  at the bottom of the income statement.
B)  at the bottom of the balance sheet.
C)  on the standard cost card.
D)  in the Work in Process Inventory account.E) A) and D)
F) B) and C)

Question 13

Standard cost is the industry average cost for a particular item.

Accepted Answer

A) True 
 B)False

Question 14

If production exceeds normal capacity, the overhead volume variance will be favourable.

Accepted Answer

A) True 
 B)False

Question 15

The standard predetermined overhead rate must be based on direct labour hours as the standard activity index.

Accepted Answer

A) True 
 B)False

Question 16

Normal standards incorporate normal contingencies of production into the standards.

Accepted Answer

A) True 
 B)False

Question 17

Use the following information for questions 
A company developed the following per-unit standards for its product: 5 kilograms of direct materials at $3 per kilogram.Last month, 1,000 kilograms of direct materials were purchased for $2,900.Also last month, 700 kilograms of direct materials were used to produce 135 units.
-What was the direct materials quantity variance for last month?

Accepted Answer

A)  $75 unfavourable
B)  $75 favourable
C)  $900 unfavourable
D)  $900 favourableE) A) and C)
F) A) and B)

Question 18

The per-unit standards for direct labour are 3 direct labour hours at $15 per hour.If in producing 700 units, the actual direct labour cost was $31,175 for 2,150 direct labour hours worked, the total direct labour variance is

Accepted Answer

A)  $50 unfavourable.
B)  $325 favourable.
C)  $50 favourable.
D)  $325 unfavourable.E) A) and B)
F) A) and C)

Question 19

There could be instances where the production department is responsible for a direct materials price variance.

Accepted Answer

A) True 
 B)False

Question 20

An unfavourable labour quantity variance indicates that the actual number of direct labour hours worked was greater than the number of direct labour hours that should have been worked for the output attained.

Accepted Answer

A) True 
 B)False

Exam 12: Standard Costs and Balanced Scorecard

Standard cost is the industry average cost for a particular item.

Correct Answer
verified

Income statements prepared internally for management often show cost of goods sold at standard cost and variances are

Correct Answer
verified

If production exceeds normal capacity, the overhead volume variance will be favourable.

Correct Answer
verified

If standard costs are incorporated into the accounting system,

Correct Answer
verified

A materials quantity variance is calculated as the difference between the standard direct materials price and the actual direct materials price multiplied by the actual quantity of direct materials used.

Correct Answer
verified

Normal standards incorporate normal contingencies of production into the standards.

Correct Answer
verified

The total materials variance is equal to the

Correct Answer
verified

Which of the following could cause a debit balance in the direct material price variance accounts?

Correct Answer
verified

The total standard cost to produce one unit of product is shown

Correct Answer
verified

The labour time requirements for standards may be determined by the

Correct Answer
verified

Standard costs may be used by

Correct Answer
verified

It is possible that a company's financial statements may report inventories at

Correct Answer
verified

An unfavourable labour quantity variance may be caused by

Correct Answer
verified

The standard predetermined overhead rate must be based on direct labour hours as the standard activity index.

Correct Answer
verified

If the standard hours allowed are less than the standard hours at normal capacity, the volume variance

Correct Answer
verified

There could be instances where the production department is responsible for a direct materials price variance.

Correct Answer
verified

An unfavourable labour quantity variance indicates that the actual number of direct labour hours worked was greater than the number of direct labour hours that should have been worked for the output attained.

Correct Answer
verified

Correct Answer
verified

If a company is concerned with the potential negative effects of establishing standards, they should

Correct Answer
verified

The per-unit standards for direct labour are 3 direct labour hours at $15 per hour.If in producing 700 units, the actual direct labour cost was $31,175 for 2,150 direct labour hours worked, the total direct labour variance is

Correct Answer
verified

Exam 12: Standard Costs and Balanced Scorecard

Standard cost is the industry average cost for a particular item.

Correct AnswerverifiedShow Answer

Income statements prepared internally for management often show cost of goods sold at standard cost and variances are

Correct AnswerverifiedShow Answer

If production exceeds normal capacity, the overhead volume variance will be favourable.

Correct AnswerverifiedShow Answer

If standard costs are incorporated into the accounting system,

Correct AnswerverifiedShow Answer

A materials quantity variance is calculated as the difference between the standard direct materials price and the actual direct materials price multiplied by the actual quantity of direct materials used.

Correct AnswerverifiedShow Answer

Normal standards incorporate normal contingencies of production into the standards.

Correct AnswerverifiedShow Answer

The total materials variance is equal to the

Correct AnswerverifiedShow Answer

Which of the following could cause a debit balance in the direct material price variance accounts?

Correct AnswerverifiedShow Answer

The total standard cost to produce one unit of product is shown

Correct AnswerverifiedShow Answer

The labour time requirements for standards may be determined by the

Correct AnswerverifiedShow Answer

Standard costs may be used by

Correct AnswerverifiedShow Answer

It is possible that a company's financial statements may report inventories at

Correct AnswerverifiedShow Answer

An unfavourable labour quantity variance may be caused by

Correct AnswerverifiedShow Answer

The standard predetermined overhead rate must be based on direct labour hours as the standard activity index.

Correct AnswerverifiedShow Answer

If the standard hours allowed are less than the standard hours at normal capacity, the volume variance

Correct AnswerverifiedShow Answer

There could be instances where the production department is responsible for a direct materials price variance.

Correct AnswerverifiedShow Answer

An unfavourable labour quantity variance indicates that the actual number of direct labour hours worked was greater than the number of direct labour hours that should have been worked for the output attained.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If a company is concerned with the potential negative effects of establishing standards, they should

Correct AnswerverifiedShow Answer

The per-unit standards for direct labour are 3 direct labour hours at $15 per hour.If in producing 700 units, the actual direct labour cost was $31,175 for 2,150 direct labour hours worked, the total direct labour variance is

Correct AnswerverifiedShow Answer

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